A MATTER OF PRECISION

Over 30 years ago in the idyllic Penang town of Air Itam, a Chinese physician who loved to tinker with his toolbox came up with a brilliant idea. With a passion for mechanical inventions and a fascination with machinery, the late Dato’ Teh Ah Ba did the unconventional; he opened a workshop, Eng Hardware Electrical, behind his clinic in 1974. The workshop produced jigs and fixtures. Today, that workshop has grown to become of Malaysia’s leading homegrown producer of precision tooling for the semiconductor industry – the ENGTEK Group.

A journey that is as remarkable as it is inspiring; the evolution of Eng Hardware Electrical to ENGTEK Group is one of calculated precision. The late 1980’s saw the company opening a 40,000 sq ft plant in the Bayan Lepas Industrial Zone and venturing into actuator production for the hard disk drive industry. It was also during this time that ENGTEK’s investment holding company, Eng Teknologi Holdings Bhd (ETHB), was set up.

In 1993, ETHB debuted on the Bursa Malaysia Second Board. Since then, ENGTEK has set spread its reach to outside of Malaysia, setting up plants in the Philippines and Thailand, as well as forging strategic alliances with Singapore’s Altum Precision, making it the Group’s first regional acquisition. ENGTEK celebrated its 30th anniversary in 2004 and is today the leading manufacturer and supplier of electrical components in South East Asia.

Despite its rapid expansion, ENGTEK has remained a family business, run by the core members of the late Dato’ Teh’s family. At the helm of the group is Dato’ Teh Yong Khoon (YK Teh), the late Dato’ Teh’s son, who is the CEO of ENGTEK. In an interview with EZ, YK Teh said that he growing up under his father’s tutelage prepared him to lead the company in the direction that his father would have been proud of. ‘I would say that I have enjoyed the life growing up with him. I really respect him in many, many ways and he brought me up as a good technical man. It also gave me a lot of opportunity to learn together from him,’ said YK Teh.

YK Teh’s proclivity towards the engineering and mechanical field was clearly one that was in part cultivated from young and the other matched by an interest that was sparked by being exposed to his father’s business. ‘I have always been very involved in the technical aspect of the business, rather than corporate planning or anything else – it is the technical part like research into process improvement and research in new product development to fulfill the customer’s needs. It always triggers me, you know, like a really huge hobby, trying to perfect or improve a product,’ he said.

ENGTEK, which was transferred to the Main Board of Bursa Malaysia Securities Berhad in 1999, recently underwent the process of privatization. The move to privatize, said YK Teh, is one of the best decisions the Group has made thus far. ‘Having it listed, I guess we had the ego of trying to expand, and then going into listed status 20 years ago which is in 1993. We did a good job, I must say, for the last 20 years. We did not have any funds or sourcing from the listed market, so in actual fact we’ve been putting in quite of a lot of dividends public after the listing process.’

‘At the same time, the last thing that we do see here is that we are in an industry that needs a huge transformation. We do believe that we need a change and the change could be dangerous or risky for our shareholders. So we see which change is best and do it ourselves. If it’s going to be positive, we can have the company listed again in the future. If it’s negative, then we’ll shoulder all the risk. Now, will this be better for the family? I must say that it will definitely be better for the family because we are all committed for this change that we want. So long-term wise, I think it is still very good for us to go in and to take the company private, which has already been one year. We are setting the footprint on going forward into other industries which are still focused in precision engineering,’ said YK Teh.

ENGTEK’s success in not only growing to become a multinational but also to withstand the downturn in Penang’s electronic sector and thrive is remarkable. Some may even say that Penang’s electronic industry is a sunset industry. To this, YK Teh said, ‘Well if you take Penang as a sunset industry for electronic sectors, I won’t say that it is 100 percent true statement. If you look at it in terms of labour cost or the ‘Made in China’ or the greater China side of it or if you talk about Thailand, Malaysia has still been one of the best in terms of engineering and the talent supply versus others, although we cannot be like same as China, because of the huge gap between our and their labour force.’

Penang, he said, has continued to support a sizable electronic industry with some of the businesses growing bigger and some graduating from manufacturing low-cost products to developing high value products. There are electronic manufacturing services companies in Penang that manufacture components for diverse high-tech fields such as aerospace, compute ‘They’re getting products that are much higher value, products that need a lot more talent as compared to before, and I think that you can see that there are a lot more engineers that are involved at this particular point. So, about the electronics industry actually being a sunset industry and going away, I don’t believe so,’ commented YK Teh.

For ENGTEK to have weathered the storm and expand its business beyond the borders of Malaysia, the level of commitment from the leadership of the company to the unity of the management had been strong. This must have been particularly tricky seeing that YK Teh was dealing with family members, which can be stressful. There is even a saying in this part of the world that family businesses normally cannot survive past the second or third generation, and in response to this, he shared, ‘I think it is mainly dependent on the support from other family members and their involvements, be it in terms of conflicts or not, whether are they really supportive. So if the family is supportive, then I would say that it is not hard to run the company at all.’

With ENGTEK, he said the company does hire professionals to fill certain posts seeing that the Teh family is not big enough to fill all the seats within the company. This practice, he said, is prevalent in many other Chinese family businesses in this region. ‘I don’t think they will go with the tradition where every member of the family has to come to work in the company, or the son or whomever has to be at the helmship of the CEO, or the No. 1 post,’ he added.

Being entrusted with the responsibility of continuing his father’s legacy, we asked YK Teh if being in such a position was hard. ‘No, not hard at all,’ he answered, adding that his family is very supportive of one another and him. Besides the support system provided by his family, YK Teh said that having a right balance in life and time management was key to stability. ‘You have to have the time; you got to have your own time to do activities other than work. To me, time is how you decide, how you allocate. So if you just work, I would say, even if you work 24 hours, seven days a week, it will still be the same as when you work 8-to-5, go home, enjoy life and then come back. In fact, you will be even more effective when you take a break. Activities with family and activities by yourself, I believe, there always needs to be a balance in terms of life and not work alone.’

But then again, being a CEO of a thriving group such as ENGTEK is bound to have a toll, which YK Teh agreed. ‘You are still at the higher end in terms of stress as compared to others,’ he said, ‘But that doesn’t mean that you can totally de-stress.’ De-stressing, for YK Teh involves personal time and time with family and friends. An avid golfer, he enjoys playing golf with his golfing buddies. As for family time, he is just like every other Malaysian who loves food. ‘Going on trips with my family, it’s always a good thing to do for family bonding. One of the things to like to do together is eat. Sometimes we take trips, ‘makan’ trips,’ he said, with a twinkle in his eyes.